FOR GENERAL DISTRIBUTIONJune 2, 2009

Transcript of seminar given at Business Startup Conference, ExCeL London 29 May 2009, 2pm by Bart Thomas, Founder & CEO, Cloud Nine.

Cloud Computing: ‘The biggest technological advance since the birth of the Internet’Business computer networks haven’t changed much since they were first available. Physical servers running a few applications usually stored in a cupboard somewhere without any redundancy, a single internet connection, little or no power backup, no air conditioning, no redundant storage, no monitoring, no capacity planning and it’s been like this for the past 20 years.

It takes a combination of new technologies to create a revolutionary improvement in the way something is done. Multi-core processors, 64 bit software, virtualization and widespread broadband have all contributed to the arrival of Cloud Computing.

I believe that Cloud Computing will be the biggest technological advance since the birth of the Internet. It will completely re-shape the IT industry and transform the way businesses work - forever.

A recent HP survey suggests that your average businesses’ IT team spends an astonishing 70% of their time and budget on repetitive tasks to simply keep their IT systems running. This leaves only 30% of their time pro-actively developing improved business systems. In my book, that means that IT staff today are effectively wasting 70% of their time.

Cloud Computing promises to reverse this statistic as it allows business to outsource the more mundane elements of their business IT operations to specialist Cloud providers who can do the job better and more cheaply. This will mean a much better focus on core business competencies.

So what is Cloud Computing?

Put as simply as possible, Cloud Computing is a system in which data and software programs are stored on the Internet rather than your own computer. The most familiar examples of this have been around for a long time – think web based email such as Hotmail. Cloud basically means Internet.

Now I’ll admit, the idea of storing information in one place instead of another doesn't seem so revolutionary. However, as with most things IT, it's far more complex and far reaching than that. Cloud computing makes it possible do deliver IT services as a “utility” – just like water, gas or electricity.

Cloud Computing is an umbrella term with three main definitions that all relate to harnessing on-demand computing power over the Internet.

Firstly, it can describe the availability of computer processing power that can be rented quickly and easily. This allows you to quickly scale server capacity, both up and down, as computing requirements change. Last February, you might remember that TFL's website crashed as hundreds of thousands of commuters looked to see how they might get to work during the heavy snowfalls. Had the TFL website been using Cloud technology it could have automatically detected the increased traffic and within minutes brought up additional servers to cope with the spike in demand.

The term Cloud Computing is also commonly used to describe the new generation of web-based services such as Hotmail, LiveDrive, Google Apps or Salesforce.com. In essence, these are simply software programs that have been written to work in a web browser so they don't need to be installed on your computer. Both the program and your data resides “in the internet cloud” so they don't require any maintenance on your part and are accessible from any computer, not just your own.

The problem with this model is that while Hotmail or Google mail is fine for casual use, like most applications written to work in web browsers, they have very limited functionality and poor interoperability with your other software.

Microsoft Outlook on the other hand is far more flexible, feature rich, faster and most importantly it will integrate tightly with other business software such as Accounting, CRM or document management systems. The problem with Outlook is that it must be installed on your computer, maintained, frequently updated, and unlike Webmail services it can't be used from anywhere.

The Cloud Computing model that I’ll discuss today solves this problem. It is called Infrastructure Cloud Computing – wherein your businesses’ entire IT systems and infrastructure are hosted and served from the Cloud. The real promise of Cloud Computing is that you can access all of your business software – even bespoke applications – from any internet connected device, anywhere. Your Cloud Computing provider looks after all of the complicated back-end systems and delivers your files, email and software programs to you on-demand, quickly and securely.

So the big question is, why would you want to do this?

The answer is that there are many, very compelling reasons. And if it all sounds to good to be true, it’s not. It’s just true.

Cloud Nine offers many advantages over the traditional model of “managed on-premise” computing that we have today. I’ve got five main points to cover. They are simplicity and increased productivity, better security, cost savings, improved reliability and how you’ll see a significant reduction in your carbon emissions.

1. Firstly, Cloud Computing brings IT simplicity & increased productivity.

The age of the server-less office has arrived! Installing, maintaining, securing and upgrading computer software is time consuming and increasingly complicated. Why not leave that part to the experts? All you care about is getting your work done. Having your software delivered over the internet instead of installed locally means you won't run into application compatibility problems either – so long as you have an internet connection, things just work.

You don't have to install your software – it is simply delivered to you when you need it. There is little to no staff re-training required either as it is the same software you would normally use. One of our clients, a construction company, recently moved offices and did so without any downtime of their IT systems. A wireless router in the new office was all that was required for them to carry on working once the staff arrived, laptops in hand.

2. Possibly the biggest benefit of Cloud Computing for business is increased security.

Data protection is a real concern for business, and IT security is a highly complex and increasingly hazardous field. If you’re in the business of writing malware then you’re a part of one of the fastest growing industries in the tech sector. It’s now a billion dollar business and organized crime gangs are reaping the rewards. “Malware”, for your reference, is the term given to cover the new generation of viruses, worms, spyware, trojans and so on.

Most SMBs barely pay a passing nod to the security of their computer networks and it is only a matter of time before they become victims. Anti-virus software is an important part of a layered approach to IT security – but it is only a part of such an approach. And most SMBs are lucky if their anti-virus software is up to date.

Cloud computing vendors live or die by their security. Wouldn't you feel safer knowing that a security team was dedicated to the task of protecting your data? Good Cloud Computing providers have specialists constantly patching, testing and probing their IT systems for weaknesses. They’ll also contract ‘white hat hackers’ to conduct regular security audits - something that most small businesses could simply never afford to do. The net result is vastly improved security for the majority of SMBs and SMEs.

Another security benefit comes from centralizing your data in a secure datacenter. Does anyone here know how many laptops are lost or stolen each year? One statistic I found states that nearly 4000 laptops go missing at airports across Europe every week! That’s one every 40 seconds. Even more concerning is that 50% of the British passengers surveyed admitted that their data was neither protected nor backed up!

There have also been numerous high profile cases of confidential data falling into the wrong hands recently and stealing a laptop has become one of the easiest ways to break into corporate networks. The MOD have admitted to losing more than 350 laptops since 2004, including one with the details of more than 600,000 people on it. A major security benefit of the Cloud Computing model is that your company data isn’t stored on the laptop – it never leaves the safety of a physically secure datacenter. So if your staff were to leave their laptop on the train, you can feel safe in the knowledge that your confidential data has not been compromised.

Another concern relates to ensuring the confidentiality and integrity of your data whilst in transit to and from your Cloud provider. All good providers will encrypt anything that you type before it is transmitted across the internet.

3. Cloud computing also delivers big cost savings.

The cloud computing approach provides even the smallest, single person startup business with the benefits large economies of scale. Businesses that could never justify the cost of sophisticated enterprise grade technologies can simply rent a small piece – only paying for what they need. The Cloud model dramatically drives down both capital and operational costs. There are many examples of companies that have saved a lot of money by moving to the Cloud model. Take for example the Preferred Hotels Group who were looking at £130,000 upfront to replace their aging server infrastructure + £6.5k per month in ongoing datacenter costs. Instead, they embraced the Cloud Computing model and they now pay little more than £10k per month for everything. They saved £88,000 in the first year alone!

So how does cloud computing reduce your costs exactly?

1. Licensing costs are reduced – software is simply paid for on an 'as needed' basis. Suddenly got a project to manage? Rent MS Project for a fraction of the cost of buying a full copy. And any MS Office upgrades are free!

2. Server hardware and engineering costs are eliminated. Buying, configuring and maintaining new IT systems traditionally has high capital and operational costs. These expenses are covered by the Cloud Computing provider and simply shared across multiple customers.

3. IT support and staffing costs are reduced. You no longer require specialist IT consultants as the only thing you need to worry about is having a computer that turns on and can connect to the Internet. If you have your own IT staff, they no longer need to waste time on mundane maintenance tasks, they can instead be working on smarter IT systems to improve your workflows and business processes.

4. You don't need to spend money replacing or upgrading your computers every few years as you do now. As I'll show you in a minute, even ancient computers that would previously have found their way to landfill can be given a new lease on life – running as fast as a new PC!

5. There will also be a large reduction in your energy consumption and costs. Your typical server consumes nearly £1000 in electricity per year, a cost easily eliminated. Furthermore, you could choose to invest in low energy desktop PCs for your business, reducing your energy bills by 80% over conventional desktop PCs.

6. There are further savings to be made for businesses that are seasonal – when you scale up staff numbers to cope with a surge in business you can quickly scale up your IT systems too. As soon as the busy period is over you can instantly scale back down again, saving you both time and money.

7. Finally, with effective remote working and increased reliability of your IT systems your business will also see improved efficiency in day to day operations. Take for example Trevor Jones, a UK accounting firm that look after a car manufacturer. Implementing Cloud Computing has meant that their accountants can now spend more time at customer sites and can work as though they were in the office. As a result, they’ve increased both customer satisfaction and their billable hours by 33% making a massive impact on their bottom line.

With Cloud Nine there are no upfront costs and no surprises, the service is rented on a per user, per month basis and costs about the same as your daily Cappuccino!

DEMONSTRATION

At this point I'd like to kick off a demonstration. I've got this old laptop with me. It's running Windows 98 – over a decade old. There is no way this computer can run Windows XP, let alone Vista and Microsoft Office 2007.

Let me show you how it works. I simply open a web page and login to my account. Please excuse the speed of the connection, unfortunately the London Excel centre provides woefully slow and overpriced internet connections! This is only a 512k connection whereas most home or business ADSL connections run anywhere from 8 to 40 times faster. But as you'll see, it is still entirely workable!

You simply log in with your username and password. This is our trial environment, a full account uses what's called a 'two-factor' security system that requires you to prove that in addition to knowing your username and password, you also have something in your possession to identify you. This is to ensure that someone can't access your account by simply stealing your login information. In our case, we send a pin number to your mobile phone that must also be entered into the login screen. The pin changes every couple of days by default.

As you can see, I'm presented with a list of the applications that have been assigned to my account. I simply click on the application I want to use and it opens up. The first application can take 20 seconds or so while it logs you in behind the scenes. Subsequent applications start up almost instantly.

OK, for all intents and purposes, it looks as though Word here is installed on this computer. But that's the magic - it's not. It can't be. I've now got Word 2007, Excel, PowerPoint, Outlook, Publisher, Project and Adobe Acrobat all running simultaneously and its fast and responsive. Remember, this computer is more than 10 years old, has 128MB of memory, a slow processor and internet connection. This is simply impossible any other way!

What's happening here is that the actual memory and processor power is coming from the server farm, not this laptop. The application is actually running remotely on the server; what you can see are just screen updates presented in a such way that makes it appear to be running on this laptop. This means that an old underpowered computer will perform like a more powerful and expensive one.

This represents another way to save money when it comes time to buy new computers! And what if you've bought a new computer recently? Cloud computing could extend it’s life for another 10 years, making it an even better investment than you first thought!

4. The Cloud computing model also means increased reliability.

Cloud providers invest heavily in redundant hardware and software systems designed to keep things running as close to 100% of the time as possible. By comparison, most businesses have a dusty server or two sitting in a corner of the office. These require regular reboots for patching, and should something serious go wrong they could suffer days of downtime, something few businesses can afford. What about backups? Has anyone here ever lost any important data? I'll bet most of you have! Do you test your backups? Do you know how long it would take to restore your information and systems if

something were to go wrong? Good Cloud providers employ powerful enterprise backup technologies to help ensure that you'll never lose data again.

You also get a business continuity plan in a box with Cloud Computing. Remember again the February snowfalls that shut down most of the country for three days and was estimated to have cost the economy £3.5 billion? If your business has their IT systems in the cloud, your staff could simply log in and continue to work from home or their local coffee shop. And presence technology means that you can see which of your staff are online and when. Your business needn't be held to ransom by transport, swine flu or infrastructure problems affecting your physical office, ever again.

DEMONSTRATION

Let me quickly demonstrate one of the reliability features. You can see here on this laptop, we've got all these applications open and we're half way through a word document that we haven't saved. Lets imagine that this laptop has either crashed, lost it's internet connection or suffered a power failure. To simulate this, I'll simply yank the battery out.

The beauty of Cloud Computing is that all you need is an internet connected device to have access to your business systems. How many of you have iPhones? Well I've got my iPhone here. I simply open the client software, give it 20 seconds or so and there you go - all my applications exactly where I left off, including my half typed word document. I bet you didn't know the iPhone could run Office 2007!

What this means is that your computer simply becomes a means of accessing your data and software. I’ll bet that if I were to delete the hard drive on your personal computer it would be a major inconvenience to you and you’d almost certainly lose important data. I however, have embraced Cloud Computing – if you were to delete my computer’s hard drive it’d be no sweat at all. I can simply log into my account from your PC and I’ve got all my data and software delivered to me, no hassles.

5. Finally, and possibly most importantly, the Cloud Computing model will dramatically improve your businesses' green credentials.

Firstly, you'll see a large reduction in energy consumption simply by not having to run your own servers. Further to this, most good Cloud providers use virtualisation technologies to consolidate many physical servers into fewer virtual servers which results in massive energy efficiency gains.

There are also energy savings to be made on the desktop too. As all of the processing is done at the server, there is no need for powerful desktop PCs. Low cost and low energy laptops and desktops are perfectly suited to the Cloud Computing model.

Finally, and as I mentioned earlier, today's “on-premise” computing model requires us to replace our servers and desktop computers every few years. The environmental cost of manufacturing new computers and disposing of old ones this frequently is enormous. And as I've shown you, the Cloud model has breathed new life into a computer more than a decade old.

Conclusion

Thank you all for coming to the seminar. I hope that I've explained the Cloud Computing concept clearly and that you've understood it's incredible implications for businesses wanting improved productivity, better security, reliability, reduced costs and carbon emissions.

Cloud Computing is here today and it's possible to deliver all of these advantages for nothing more than the cost of your daily cappuccino.

Over the next five years, more and more companies will understand the advantages of letting someone else manage the IT backbone. They won’t want to deal with the power costs, the constant upgrades, updates and maintenance of the infrastructure. They’ll want to outsource all of that and just own the data, simply plugging it in to an existing cloud infrastructure like we plug a light into a socket. And if they want, they can pull the data out and find a better vendor. Companies will be able to move freely between the vendors who manage infrastructure whilst always owning the most important part – their data.

Contact: Roland Daniells

E: roland_daniells@homechoice.co.uk

T: 07866 728429